Rim-Internal Analysis

An International Management Applications Paper – Research in Motion (RIM) Title of Article:“Time to Pick BlackBerry Again? ” Source and Date:The Wall Street Journal NOVEMBER 9, 2010, 1:44 P. M. ET Author:MARTIN PEERS Summary of Article: This article talks about why Blackberry maker RIM may still have hope in the smartphone industry; meanwhile acknowledging that there is no longer any debate that BlackBerry is yesterday’s technology. According to the article, RIM’s once irrefutable position among business and government customers shows signs of eroding, as rivals like iPhone maker Apple make inroads.

Competitive pressure in the U. S. is likely to increase if, as expected, Verizon Communications’ majority-owned Verizon Wireless starts selling the iPhone next year. RIM’s share of the smartphone market fell to 15. 3% in the third quarter. In this environment, the impact of any piece of bad news is magnified. Hence RIM’s Friday stock drop on news of Dell’s unsurprising decision to replace BlackBerrys in its work force with its own phone. However, perceptions about RIM’s technology competence could change quickly once its PlayBook tablet hits the market next year.

The device will use software from QNX, recently acquired by RIM. Eventually QNX software is expected to be used in BlackBerry phones as well. Gartner analyst Ken Dulaney goes on to mention in the article that QNX gives RIM a “fresh start” with its operating system. The company could use it to solve its biggest problem: the lack of a touch screen interface as easy to use as the iPhone’s, but it has to show it has the engineering expertise to take advantage of the opportunity.

The article concludes by placing emphasis on the urgency of this taking place without too much delay as rivals like Apple continue to forge ahead consequently leaving RIM with major risks, and lastly that the stock may get cheap enough to deserve a second look. Application of terms and concepts: RIM’s business model is not carrier-friendly. RIM’s arrangements with carriers, which include per-seat and per-BES fees, reflect the strength of its brand and the weakness of competition. Several carriers have expressed the view to us that they would at least like to have an alternative offering in their portfolio alongside BlackBerry.

RIM has a unique offering and strategy according to the article since it was the first company to understand that mobile applications need to be delivered as part of an integrated package, including hardware, software and services, that is both complete and simple to use. RIM’s business model is also a strong weapon against the competition, as it enables its resellers to charge for maintenance and support as part of a subscription, rather than charge an annual fee. This remains RIM’s main strength and weapon against its competitors. Recommendation:

I would think that it’s in the interest of RIM to spend a good amount of their revenue on integration and implementation at the least. For instance, their tablet announcement indicates this is a company that doesn’t spend money when it comes to promotions and innovation. RIM’s share of the smart phone market fell to 15. 3% in the third quarter from 19. 9% a year earlier, according to IDC (International Data Corporation). They need to make their smartphones better and more competitive, not branching out beyond their core competency into other areas where there are already plenty of competitors.

Blackberry was built on providing unique functionality – reliable, secure e-mail that you can get and send from anywhere. That’s not a unique offering anymore. Now they have to compete on the basis of interface, applications, etc. and they are pitted against a lot of bigger and more powerful competitors such as Apple, Microsoft, Motorola, and Google. They need to be nimble and execute perfectly, and going off and building a iPad clone shows they do not have the laser-like focus on their core competency they will need to succeed long-term in this space.

They will hang on for a while at this rate because Blackberry users seem to hold their reservations when it comes to adopting new platforms, but unfortunately I don’t see any basis for them being a serious player in this space in 5 years at this rate. RIM needs to respond with smarter pricing and marketing strategies very soon like the article mentions. Ideally, RIM should aim to price and package its products for different categories of workers as well as for different segments of the market as it does today.

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